UK RICS House Price Gauge At 3-Year High

6/11/2013 1:11 AM ET

A gauge of house prices in the UK rose to its highest level in three years in May, suggesting that government's policies to revive the property market have started to pay off, results of a survey by the Royal Institute of Chartered Surveyors (RICS) showed Tuesday.

The RICS house price balance rose to 5 in May from 1 in April. This was the highest reading since June 2010. A positive reading indicates more survey respondents saw values increase rather than decline.

Also, indicators of new buyer inquiries and home sales rose to their highest levels since 2009, suggesting improved demand. The survey balance for newly agreed sales rose to 30 in May from 21 April. The indicator for new buyer inquiries advanced to 30 from 27.

Surveyors expect house prices to increase 1.4 percent in the next 12 months, up from 1.1 percent increase forecast in April.

"There is still a very long way to go "until we see a full-scale recovery but green shoots are beginning to sprout," RICS global residential director Peter Bolton King said.

A number of British residential market surveys have recently pointed to improved market conditions, mostly supported by the Bank of England's Funding for Lending Scheme (FLS) and the government's Help to Buy scheme.

The BoE's FLS was launched in July 2012, offering funding to banks and building societies for boosting their lending to the real economy. The Help to Buy scheme is a new government-backed initiative with an aim to help buyers purchase a property without large deposits.

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